Economics

Book Review: Tyler Cowen’s Big Business, A Love Letter to an American Anti-Hero

If it seems like I just wrote a review of a new Tyler Cowen book, that’s because I just did. He’s since written another though. With six months between releases, the Tyler Cowen production function is clearly in full effect.

His latest, Big Business: A Love Letter to an American Anti-Hero is well described by the title. It’s a book that few besides Tyler Cowen might have dared to write. It’s difficult to get laughed out of the room for naivety when much of your brand is knowing more things about more things than anyone. For most everyone else, I suspect it would be received differently. The response I got from tweeting a few of the lines from the book without attributing them to Cowen was a combination of eye rolls and followers mistaking it for satire.

It’s not satire though. Tyler Cowen is quite serious. And he’s insistent on using his eclectic super powers to fill a needed void in today’s intellectual rubric; a credible source of permission for calculated optimism.

Cowen’s last book, Stubborn Attachments told us, among other things, not to be afraid to seek hard truths because we could be trusted to do the right things even if we found those truths difficult to swallow. His newest book tells us that one of those hard truths might be that big business is good for mankind. And we shouldn’t fear a world where we trust in it to play an oversized role compared to other alternatives.

That something reasonably obvious should be a hard truth is some part of Cowen’s point.

The general thesis of the book is that, at the margin, big business is a better influence on society than the alternatives. Government, politics, small businesses and even plain old private citizens all have institutional flaws or introduce risk through the power of obscurity or anonymity. Large corporation, on the other hand, have some mandate to sustain their existence and branding with many public eyes on them. Coupled with the motivation of sustainable profit, this makes them inherently trustworthy. At least relatively so.

The theory is one I can put to the test pretty easily with the natural experiment that’s my own professional experience. I’ve worked in multiple industries, presently in the Silicon Valley based tech sector, and also served 15 years on active duty in the military. I’ve spent enough time on both sides of the private and public sector to advance to roles that granted some level of insider experience. That experience has run the tracks for some telling mental thought patterns.

My gut reaction to the recent reports of war crimes in the community and even more specifically within the command in which I served, was disgust. But it wasn’t surprise. In fact, I’m surprised it hasn’t happened or been reported on more over the last 20 years. That is hasn’t is a credit to the individuals that serve and the unique decisions they make to ensure it doesn’t. Because in reality the institutional characteristics of the military make it an inherently risky organization. It has hard laws on the books that purposely subvert transparency, official positions of discrimination on multiple fronts and tolerates high levels of civilian casualties and even poorly thought out wars that destabilize regions.

In contrast, my gut reaction to the Volkswagen emissions scandal was shock. I know why they did it. I have no idea how.  I certainly don’t think higher of the people at Volkswagen than I do of my brothers and sister in arms. But I do know what it takes to make corporate decisions and execute corporate policy. And it’s really, really, really hard to convince leaders to do anything intentionally corrupt at scale. If for no other reason than it’s impossible to keep one of the dozens to hundreds of people it takes to do it from going public.

No one got a review they didn’t agree with from a manager they didn’t like and just put it out there on Facebook…? Really?

I get to stand and be honored in the bottom of the second inning of every baseball game I go to because I served in the military. The idea of calling in the corporate stiffs for the same level of appreciation would be laughable.

That perhaps the appreciation gap should be narrower than anyone wants to admit is part part of the point of the book.

Few disagree that big business does good by producing the things modern society needs to exist and employing and providing benefits for large swaths of the world. The catch is that we believe corporations can’t be trusted to treat employees, the environment, customers or the general public well if its runs counter to their primary motivation of profit.

Simply adding profit as a motivation enables the public to appreciate and trust corporations less than they do the military, an institution constructed to do things explicitly that ought to make us trust them less. Why is probably a topic for another book. Maybe Tyler can take it on over the first three-day weekend this fall.

This book, like Cowen’s last, is a quick read. It runs through counter arguments like CEO pay, the modern working environment, evil tech companies and the financial crisis. Some of the data points feel overfit to the argument. Part of that is probably the commitment to making it a quick read. More intentionally though, I suspect, part of Cowen’s point is that the media narrative is also overfit. It takes advantage of rare one-offs to weave a tight analysis of profit seeking horribleness. An so the data, even if narrowly selected, is at least as believable as the narrative. And so, at a minimum, perhaps the tiebreaker can be the ubiquitous good that comes from the production of everything and the employment of everyone.

My best argument against Cowen’s point is that profit seeking as a rule of law is something more fragile than the inherent rights of man that other organizations claim as a first principle. And so slippery slopes abound. I’ve watched groups slide right down them and nearly take me with them. But they’re far less dubious than most imagine when skimming the sensational headlines. And they’re rarely, if ever, repeated. It’s hard to shake the image of Alan Greenspan in front of Congress in 2009 telling us that the trust he had in free markets was more limited than he had thought though. And so there’s some fear that one day we’ll wake up and have been duped again.

That still seems considerably lower a chance than the guy who painted my house that insisted that I pay him cash because he didn’t want to pay taxes that go towards funding the schools my kids go to or the first responders in our neighborhood. We all have some version of that story of our own. While the stories of corporate malfeasance tend to be things that happened to someone else less real.

Such is Cowen’s point.

Categories: Economics

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3 replies »

  1. Businesses are profit driven. That makes them inherently corrupt and corruptible. They don’t care about people or the environment, until it hurts their profit margins and then they will have to figure out a marketing angle so they can pretend to care.

    So their profits continue and grow, regardless of the impact on or to anything or anybody.

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  2. Capitalism, and the corporate structure, have a lot of positives. However, we need good regulations and a rule of law to ensure the right balance between the benefits and risks. (The current administration is going backwards on regulations and, worse, is tearing down the rule of law.). Even so, companies will have different cultures. Some have cultrues that reinforce and reward ethical behavior while others (e.g. VW, Wells Fargo) clearly don’t, or at least didn’t in the past.

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